drive and fly near an airport incurred the following cost to acquire land make land 492110
Capitalized asset cost and partial year depreciation
Drive and Fly, near an airport, incurred the following cost to acquire land, make land improvements, and construct and furnish a small building:
|
a. Purchase price of 3 acres of land |
80,000 |
|
b. Delinquent real estate taxes on the land to be paid by Drive and fly |
5,600 |
|
c. Additional dirt and earth moving |
9,000 |
|
d. Title insurance on the Land acquisition |
3,200 |
|
e. Fence around the boundary of the property |
9,100 |
|
f. Building permit for the building |
500 |
|
g. Architect fee’s for the design of the building |
20,700 |
|
h. Sign near the front of the property |
9,000 |
|
i. Material used to construct the building |
215,000 |
|
j. Labor to construct the building |
173,000 |
|
k. Interest cost on construction loan for the building |
9,500 |
|
l. Parking lot on the property |
29,000 |
|
m. Lights for the parking lots |
11,300 |
|
n. Salary for the construction supervisor (80% to the building 20% to the parking lot and concrete walks) |
80,000 |
|
o. Furniture |
11,600 |
|
p. Transportation of furniture from seller to the building |
2,200 |
|
q. Landscaping ( shrubs) |
6,300 |
Drive and fly depreciates land improvement over 20 years, buildings over 40 years, and furniture over 10 years, all on a straight-line basis with zero residual value.
Requirements:
1. Set up columns for land, land improvements, building, and furniture. Show how to account for each cost by listing the cost under the correct account; determine the total cost of asset.
2. All construction was complete and the assets were placed in service on July 1. Record partial-year-depreciation for the year ended December 31.
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